The Folly of Forecasting

Posted on December 30, 2014

As 2014 ends and pundits look to 2015, financial news will no doubt be flooded with estimates of price targets for various popular indexes. One of those forecasts will undoubtedly end up being right and with any luck, the reasoning might be accurate as well. That said, the only safe forecast seems to be that any other forecasts are not as valuable as the time it takes to read them. In The Folly of Forecasting, Meb Faber highlights the research of James Montier, which ties behavioral biases to the tendency of investors to place credence in forecasts–and shows how forecasters are potentially more likely to be wrong than ‘non-experts.’

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